Apple, China Mobile still struggling to reach iPhone deal?

Apple and China Mobile remain deadlocked in their negotiations to bring the iPhone to China, according to a new report that places the App Store at the center of the latest conflict.

Interfax China is citing a source at China Mobile Research Institute who says the president of China Mobile recently visited the institute and discussed his company's talks with Apple.

Wang Jianzhou said China Mobile has had three rounds of negotiations with Apple chief Steve Jobs, chief operating officer Tim Cook and other company officials over 18 months.

The most recent round broke down over China Mobile wanting direct control of the App Store, including collecting payments.

According to the source, Wang said the same credit card payment system that works elsewhere in the world won't fly in the Chinese market where users pay with deposits made in their mobile phone accounts.

That alone would necessitate China Mobile playing a part in administering the App Store in China, he claimed, but Apple disagreed.

"Wang said China Mobile should operate the application store itself in order to maintain its advantage," the source said, adding that China Mobile is in the midst of making its own strategy for selling smartphone applications.

The first round of negotiations is said to have broken down when the mobile operator rejected Apple's request for between 20 and 30 percent of revenues from iPhone users.

Then, Apple offered to sell the company each iPhone at $600 under the stipulation that China Mobile subsidize iPhone service bundles offered to customers, but the carrier balked, the source said.

Analysts have separately predicted a Chinese iPhone launch in recent months, and Apple had even posted a job listing for an iPhone Quality Assurance Engineer in Beijing.

The Interfax China story termed the App Store disagreement as the "third and final round of negotiations", but it is unknown whether the two companies are still in talks to bring the iPhone to the country.

China Mobiles is the largest mobile phone operator in the world, claiming over 415 million subscribers as of last June.

Aaargh, just forget China Apple, its not like those 415 million subscribers will get the iPhone or at least 1 quater of it, most of China people couldn't care less about brand loyalty and besides there is not much Chinese songs in the Music Store, why would Chinese people use iPhone? The iPhone has strong sales cause of its english music library, and apps. Now if Apple were to offer it to China, the iPhone only selling point is the apps and honestly, I bet there isn't many iPhone app provided in Chinese.

Apple is a hardware company, dont believe me? Read this Article!. For those who understand my message, help me spread this info to those who dont get it.

If the China Mobile wants control of the app store...forget it. Just let them continue to clone the iPhone. NO WAY Apple should give away control of the App store as that effectively gives away control over the platform. I understand we are talking China here so massive content control will be inevitable, but this goes to far. It is like renting a car and demanding that they give you the title to the vehicle as well.

If China wants to be part of the 'first world' they have to get used to the idea that electronic commerce pretty much depends on having a credit card. No credit card, no App and no downloading of songs/movies/books, end of discussion. Censorship issues aside, that still doesn't prevent a Chinese citizen from having and using all the other features of the iPhone.

what this does is maintain a "black market" for the V1 iphone
i wonder if something will happen before june when millions upgrade to V3 iphone and "sell " on ebay V1 come june--september
this is how monopolies hurt the consumer
consumers have little recourse except if apple sells them unlocked
but the chinese already are jailbraking the phones they buy elsewhere
i wonder what apple's next move.
i thought under communism profit was evil, i guess if you have the power AND the profit that works to support this totalitarian state.

There are 3x3G licenses issued in China. China Mobile get the TD-SCDMA version, which is not compatible with iPhone 3G (WCDMA/HSDPA). So negotiation with China Mobile is pretty much nosense now, unless Apple is willing to make a special version for China only.(A very special version since infineon's baseband chip collection don't cover TD solution variaty - read: highly unlikely)

There are some 1M Jailbroken iPhone in use in China now, Apple is doing relatively well without carrier's promotion. Besides, Chinese carriers seldomly do subsidies, subscribers don't expect a subsided price either. Shell out $400+ for a fancy gadget especially cellphone is considered perfectly normal & tens of thousands Chinese are buying high-end phones every day. N95/N96 are unbelievablely popular in China, despite the similarly unbelievablely $500+ price tags.

But Wang Jianzhou‘s comment about credit card is accurate, Apple can't expect a matured financial system here in China, iTMS payment mode will fail. But like the rest of the world, e-commerce manage to thrive nontheless. Alibaba, the biggest B2B/B2C company provides a legit service called Alipay, which utilized every major bank's online banking system. So the App Store payment problem can be easily addressed, just partner up with Alibaba，and they are good to go - believe me as a private owned company, Alibaba is way more easier to deal with than any state owned mammoth i.e. China Mobile.

If the business world is full of un-constructive asshole companies like China Mobile I'm amazed that Apple manage to get anything done.

China Mobile sound like they have a market monopoly for all the wrong reasons. It would be very satisfying if Apple worked in tandem with one of the smaller carriers and sunk China Mobile's battleship. Not an ideal scenario but it's not like Apple hasn't taken on the big boys before.

Having spent a little (not a lot, but some) time in China, I would NEVER give control of anything to a Chinese partner. You have little or no legal recourse when things go badly and you've effectively given them operational control of the business.

As for buying apps, let Chinese convenience stores sell gift card credits. Its a simple model. Recall, many Asian pay many of their bills at the local 7-11.

I really also don't like opening up too much of the engineering to partners as well if they also do hardware. Does China Mobile also do handsets?

Having spent a little (not a lot, but some) time in China, I would NEVER give control of anything to a Chinese partner. You have little or no legal recourse when things go badly and you've effectively given them operational control of the business.

As for buying apps, let Chinese convenience stores sell gift card credits. Its a simple model. Recall, many Asian pay many of their bills at the local 7-11.

I really also don't like opening up too much of the engineering to partners as well if they also do hardware. Does China Mobile also do handsets?

1. Just Sell the iPhone as Stock handset.
2. Apple could do it with cash coupon / vouchers. Very popular in China.
3. Have a special deal with China Unicom just to piss off China Mobile.

China Mobile does not even have WCDMA liscense. I dont understand why Apple is still bothering with them.

I wasn't specifically meaning the iPhone, just any Apple products that are manufactured in China.

Still as long as Apple outsource its product manufacture business, it has little choice but rely on OEM supplier's judgement on facility site choosing.

So threat to pull the plug on Chinese factories won't be making the goverment nervous a bit, Taiwan's economy are so depend on mainland input/output now (To be more accurate, co-dependence between these two). Even if Apple somehow can dictate its supplier to move pipelines/warehouses back to the island, these companies would not dare to do so for both economic & political reasons.

Back to the topic, Apple is said have been in a new negotiation with another Chinese telecom company for some times now, the former mentioned China Unicom, Let's wait a little longer to see what will happen. Personally I hope they seal the deal before "the third coming", but I'm not at all optimistic. There are too many hurdles to jump over. To offically get in the game of Chinese mobilephone, Apple literally need to bend over backwards to fit in. And Apple don't do bend over backwards, which is part of why I love the brand.

And the reason why Apple need a carrier is quite simple in my opinion. iPhone is nothing without a data plan. Chinese carriers don't offer unlimited data plan, period. The few available plans suck royally. So to get people to actually take advantage of iPhones' capability, Apple do need a carrier to dish out a reasonable data fee scheme.